1. SHALE AND THE US ECONOMY Kathleen B. Cooper October 22, 2013

2. Hope for the U.S. economy? Global economy remains in the doldrums…even Emerging Market economies have slowed Fiscal uncertainty and QE tapering drags on economy Three powerful forces for 2014 and beyond Housing market slowly rebounding Increased financial regulatory certainty Shale production adding well-paying jobs Bottom line: Challenges remain but better growth and a healthier financial industry ahead

3. Why shale production an economic driver? Energy industry tends to create high-paying jobs and projects are long-lasting But US until recent years was becoming increasingly dependent upon other countries for fuel imports Negative for our confidence and trade balance Especially dependent upon the Middle East for energy imports So…what has changed? Technology is the key

4. Shale basins pervasive in the US

5. Shale gas leads growth in total production Source: EIA, Annual Energy Outlook 2013

6. Tight oil leads growth domestically Source: EIA, Annual Energy Outlook 2013

7. Top natural gas producing countries, 2011 Source: BP Statistical Review of World Energy June 2012

8. U.S. becomes a net exporter of natural gas Source: EIA, Annual Energy Outlook 2013

9. U.S. leads the oil revolution Source: Energy Information Agency

10. U.S. dependence on oil imports declines Source: EIA, Annual Energy Outlook 2013

11. Middle East oil export by destination Source: IEA, 2012

12. Net oil & gas import dependency by country Source: IEA, 2012

13. Study finds positive economic impact from shale production IHS Consulting estimates that unconventional natural gas will equal 2/3 of total used by 2015 Gas activity will account for 1.5 million U. S. jobs in 2015, 2.4 million jobs in 2035 Over the next 20 years, 20 “producing states” will earn significant revenues and generate jobs Majority of top producing states have lower rates of unemployment than national average

14. Employment change since January 2008

15. Global fuel mix evolution by decade Source: Smil, Energy (1800-1960) Percent

16. Conclusions US shale production of oil & gas will continue growing over the next decade…in our region and elsewhere Jobs created will boost US economic growth, reduce energy dependence, require lower foreign capital inflows Healthier economic growth means a healthier financial industry, which will adapt to new requirements and regenerate profits Safety concerns overblown according to UT study Road ahead challenging but likely rewarding for the industry and economy

17. SHALE AND THE US ECONOMY Kathleen B. Cooper October 22, 2013

18. Canadian oil to US via Keystone